Activity has certainly improved over the last little while in the SPF business. One Ontario manufacturer remarked, “We have had one hell of a run. I think you are going to see some stabilization now, but there should be a good market, relatively speaking, for the next 4-8 weeks.”
An Ontario wholesaler noted that “the drive up in the market was because the pipeline was completely empty, from retail to the distributor and even the sawmills. There was not a lot of product in the pipeline. Once the doors started to open and construction started to ramp up people had to replenish and they had to replenish quickly. That is when a lot of people realized that there was not a lot of lumber in the market. There was not a lot of availability, which pushed the market up. It’s very simple, the supply and demand ratio was totally out of balance. Today it may be better, but I think order files at mills are still fairly extended.”
Said one Quebec-based producer, “Business was still going well towards the middle of March, and you can easily see the impact on prices in April as the closures took hold. But by the end of June, general pricing had moved back up nicely.”
An Ontario manufacturer remarked, “I think as products have to be moved to job sites, and I don’t think that is going to slow down any time soon, people are going to be worried about the next wave of COVID. Experience, in this province at least, now tells you that if you have jobs on the go, if you have started a project before the next wave hits, the government won’t stop them, you get to continue with that work. But if you haven’t started a job, you won’t get to start it – no new ones will go forward if the government has to close things down again. As a result, builders are racing to dig holes and pour foundations and they can worry about walls and roofs later. It’s going to be like that for the next six weeks and if the next wave does happen, then at least builders will be able to consume products and keep their workers working and keep their cash flow going.”
An Ontario wholesaler reported that “premium grades are moving well in all dimensions, they are ‘nuts’ in this province. In terms of what is moving best, 2×4 and 2×6 random are hot and the 2×4-16-foot No. 2 is also in heavy demand. There is weakness in the market right now in my opinion.”
Said a Quebec producer, “I am pretty positive about the future. There is an interesting situation in wood preservative materials, the take-away is much higher than those companies anticipated and they are very, very busy. COVID has created a lot of demand for treated wood, be it fencing, decking etc. They can’t keep up right now. For that particular grade, the supply side wasn’t there, and so it has pushed prices up. There was couped up demand for treated material for DIY, and suppliers can’t keep it in the yards.”
One Quebec wholesaler noted, “There are no issues moving materials, be it cars or trucks, it doesn’t matter. The U.S. recently bought as much as they are going to need in the short term. But I anticipate the next rally, which will likely come in the next 10 days, should come from the Americans.”
Ontario Pine markets, according to an Ontario producer, “are poking along, but there is activity out there, no doubt about it. It does seem that the retailers didn’t miss a step, they did not see things too much different than normal. They just didn’t get an earlier start, because of COVID-19. Retailers seem to be doing ok. People are bored during the shutdown and they are looking for things to do, so often it is DIY projects. These are projects that people just never got to or had put on the back shelf and now they are going at them.”
One Ontario wholesaler commented, “The industrial side is slow. It hasn’t come on stream mostly due to the decrease in overall manufacturing activity across the economy. This lumber is going into pallets/sheathing and if companies in general are not manufacturing out there, they are not using these products. COVID put a damper on manufacturing, so the industrial grades haven’t been able to open right up.”
When asked what people see ahead, several felt that was a loaded question. One Quebec producer suggested, “The fall scares me, you could have both the flu and COVID coming at the same time and that could be scary. It could be worse than what we just went through, because at least most of the flu was done when the first wave of COVID hit. But who knows, maybe authorities can nip it in the bud earlier if it hits again later in the year. At least they have a bit of a track record, which could help.”
“Prices are still firm,” noted one Ontario producer. “White Pine is such a specialized business, it doesn’t often bounce around that much. When the Canadian dollar is low that helps us, in that we don’t have the U.S. companies bringing their product up here to our market. But it wouldn’t take much to upset things in these unusual times, because our market is smaller than theirs. But despite that, they only have so much market down there to saturate and it would be scary if the U.S. producers started to move product up north of the border here at any price. Let’s hope things get stimulated down there, as so much of the short-term future depends on what happens with the U.S. economy and their housing starts.”
Quebec Pine producers were less enthusiastic, with one manufacturer mentioning that “things are not that good, due to the virus. It has been quiet for two months but it is slowly starting to improve, assisted by the Quebec government allowing small businesses to re-start.”
Another producer mentioned, “There is a hope that business will continue to climb, as the summertime is usually good for us and we really need that to happen again this year. Part of the blame for the slower business goes to the fact that Montreal, such a key location for activity, was such a hard-hit area and was closed down longer than other parts of the province.”
A Quebec wholesaler noted, “We are encouraged by the recent national job numbers. This is a good sign for our economy, with employment up by about 290,000 jobs in May, and almost 80 percent of that was from Quebec. Our government let the construction industry return in the middle of April and other restrictions came off in early May, at least outside of Montreal.”
It should be noted that by contrast, Ontario was the only province where employment went down in May, although losses were less dramatic than they were in March and April. The first stage of Ontario’s re-opening process started after the Victoria Day weekend in mid-May and has been slower than in most other parts of Canada.
